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ERIA Study to Further Improve the ASEAN Economic Community Scorecard: the Philippines Rafaelita M

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ERIA Study to Further Improve the ASEAN Economic Community Scorecard: the Philippines Rafaelita M Philippine Institute for Development Studies Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas ERIA Study to Further Improve the ASEAN Economic Community Scorecard: the Philippines Rafaelita M. Aldaba et al. DISCUSSION PAPER SERIES NO. 2010-24 The PIDS Discussion Paper Series constitutes studies that are preliminary and subject to further revisions. They are be- ing circulated in a limited number of cop- ies only for purposes of soliciting com- ments and suggestions for further refine- ments. The studies under the Series are unedited and unreviewed. The views and opinions expressed are those of the author(s) and do not neces- sarily reflect those of the Institute. Not for quotation without permission from the author(s) and the Institute. October 2010 For comments, suggestions or further inquiries please contact: The Research Information Staff, Philippine Institute for Development Studies 5th Floor, NEDA sa Makati Building, 106 Amorsolo Street, Legaspi Village, Makati City, Philippines Tel Nos: (63-2) 8942584 and 8935705; Fax No: (63-2) 8939589; E-mail: [email protected] Or visit our website at http://www.pids.gov.ph ERIA Study to Further Improve the ASEAN Economic Community Scorecard: the Philippines Lead Authors Rafaelita M. Aldaba, Dorothea C. Lazaro, Gilberto M. Llanto and Erlinda M. Medalla Secondary Authors Josef T. Yap, Francis Mark A. Quimba, Melalyn C. Mantaring and Larraine C. Zafe Final Draft 13 September 2010 Table of Contents Acknowledgement v List of Acronyms vi List of Tables, Figures and Boxes x Chapter 1 The Philippine Development Experience 1 1.1. The Openness Model of Development 1 1.2. The Philippine Experience 1 References 10 Chapter 2 Investment Liberalization and Facilitation 12 2.1. Liberalization of Philippine Foreign Direct Investment Policy 12 2.2. Investment Promotion and Facilitation 15 2.2.1. Investment Promotion Agencies 15 2.2.2. IPA coordination and crafting of the first Philippine investment plan 17 2.3. FDI Performance: Trends, Patterns, Distribution and Sources 19 2.4. Analysis of Survey Results 25 2.4.1 Government IPAs 26 2.4.1.1. Strategy 26 2.4.1.2. Investment Promotions Agencies (IPAs) 28 2.4.1.3. One Stop Shop (OSS) and Investor Facilitation/Servicing 31 2.4.2 Private Sector 33 2.4.2.1. Major Characteristics of Respondent Firms 33 2.4.2.2. Decision to Invest 34 2.4.2.3. Investment Promotion and Information Facilitation 35 2.4.2.4. OSS and Investor Facilitation/Servicing 36 2.4.2.5. Investor Linkages and Policy Transparency 38 2.5. Summary and Recommendations 42 References 47 Chapter 3 Trade Facilitation and National Single Window 49 3.1. Current State of Trade Facilitation Initiatives 49 3.1.1. Customs Modernization and Reforms 49 3.1.1.1. Computerization of Customs Services (First Wave) 50 3.1.1.2. Adoption of Risk Management and the Post-entry Audit 51 3.1.1.3. Modernization of Customs Services (Second Wave) 51 3.1.1.4. Accession to the Revised Kyoto Convention 54 3.1.2. Broader Trade Facilitation Initiatives 54 3.1.2.1. One-Stop Shop Export Documentation Center (OSEDC) 55 3.1.2.2. Reforms and Automation in Economic Zones 56 3.2. Philippine National Single Window Initiative 57 3.2.1. Mandate 57 3.2.2. Scope 58 3.2.3. Source of Financing 58 3.2.4. Basic NSW Process Flow 58 3.2.5. Timeline and Approach 60 3.2.5.1. Phase 1 60 ii 3.2.5.2. Phase 2 61 3.2.5.3. Subsequent Phases 61 3.2.6. Assessment of Implementation by Standard NSW Stages 62 3.2.6.1. Other Government Agencies 63 3.2.7. Indicators and Assessment of Trade Facilitation in the Philippines 63 3.2.7.1. Trade Enabling Index and Ease of Doing Business 63 3.2.7.2. ERIA Customs and Cargo Clearance Survey 64 3.2.7.3. Survey on ICT impact on trade facilitation to SMEs 68 3.2.7.4. ASEAN Single Window 68 3.3. Conclusions and Recommendations 69 3.3.1. NSW: The Philippine Approach 69 3.3.1.1. Fast-track and second-best approach 69 3.3.1.2. Convergence with other government agencies 70 3.3.1.3. Consultation-training of private stakeholders 70 3.3.1.4. Sustainability and role of private sector 71 3.3.1.5. Governance project 71 3.3.2. NSW compatibility with ASW 71 3.3.3. Other Areas of Trade Facilitation 71 3.3.3.1. Data collection and access to information 71 3.3.3.2. Responsive administration 72 References 72 Chapter 4 Service Liberalization and Regulatory Environment In The Port, Road Transport and Logistics 74 4.1. Current State of the Ports, Shipping, and Road Transport Sectors 74 4.1.1. Ports and Shipping 75 4.1.1.1. Manila North Harbour 76 4.1.1.2. Subic Port 77 4.1.1.3. Cebu Port 77 4.1.1.4. The Strong Republic Nautical Highway System (SRNH) 78 4.1.1.5. Performance of Philippine Ports 78 4.1.1.6. Status of Liberalization 79 4.1.1.7. Regulatory Environment 81 4.1.2. Road and Road Freight Services 85 4.1.2.1. National Roads Network 85 4.1.2.2. Toll Roads 87 4.1.2.3. Regulatory Environment 87 4.2. Scorecard For Road Freight Services, Time And Logistics Cost 89 4.2.1. Results of Logistics Time and Cost Survey 94 4.2.1.1. Automotive Sector 95 4.2.1.2. Semiconductor and Electronics Sector 96 4.2.1.3. Textile Sector 96 4.2.2. Logistics Time and Cost 97 4.2.2.1. Automotive Sector 97 4.2.2.2. Semiconductor and Electronics Sector 98 4.2.2.3. Textile Sector 101 4.2.3 Common concerns of exporting firms 102 4.2.3.1. Decreasing number of establishments that provide logistics services 102 4.2.3.2. Low quality of truck and freight services 102 4.2.3.3. Lack of coordination and common understanding of guidelines 103 iii 4.3. CONCLUSIONS AND RECOMMENDATIONS 104 References 105 Chapter 5 Conclusions and Recommendations: Way Forward 106 5.1. Investment Liberalization and Facilitation 106 5.2. National Single Window and Trade Facilitation 107 5.3. Transport and Logistics 109 Reference 110 iv Acknowledgement This study benefited from the cooperation of many government agencies and private firms. They granted requests for interviews and responded to survey questionnaires. The authors express their gratitude to all of them. Special mention goes to the following: Cdr. Guillermo L. Parayno, Jr. (ret.), Former Commissioner, Bureau of Customs Hon. Alexander Arevalo, Deputy Commissioner, BOC Hon. Reynaldo Nicolas, Deputy Commissioner, BOC Hon. Preceles Manzo, Former Assistant Secretary, Department of Agriculture Hon. Ramon Kabigting, Assistant Secretary, Department of Trade and Industry Hon. Elmer Hernandez, DTI Undersecretary & Managing Head of the Board of Investments Engr. Roberto Delfin, Chief, Road Transport Planning Division, DOTC Ms. Nida P. Quibic, Division Chief, Management Information Division, LTFRB Mr. Antonio Domingo, Executive Director, Philippine Institute for Supply Management Hon. Lilia de Lima, PEZA Director-General Mr. Elmer San Pascual, PEZA Group Manager Promotions & Public Relations Group Mr. Ernesto Gorospe, Vice President Business Development Group Clark Development Corporation Mr. Ronnie Yambao, Manager, Business & Investment Group, Subic Bay Metropolitan Authority Ms. Josephine Ivy Ferrer-Alipoon, Division Chief, Logistics Department, Business and Investment Group, SBMA Mr. Lee Baldwin, Executive Vice President, MOF Company Subic, Inc. Mr. Joeji Santos, Business Development Manager, Subic Satellite Office, Airlift Asia, Inc Ms. Elisa Radovan, Business Development Manager, DHL Forwarding Mr. Wilfredo Esguerra, Fuso Logistics Phils, Inc. PIDS staff also made significant contributions. The authors would like to acknowledge the excellent assistance provided by Maureen Ane. D. Rosellon, Kathrina. G. Gonzales, Mildred C. Belizario, Fatima Lourdes E. Del Prado, Donald B. Yasay, Christine Ruth P. Salazar, Merle G. Galvan, Jocelyn P. Almeda, and Susan I. Pizarro. The study also benefited from the comments and suggestions of Dr. Ponciano S. Intal, Jr. and Dr. Dionisius A. Narjoko of the Economic Research Institute for ASEAN and East Asia (ERIA); Dr. Hank Lim, Singapore Institute of International Affairs; Dr. Philippa Dee, Crawford School of Economics and Government, Australian National University and the participants to the 2nd Workshop on the Study to Further Improve the ASEAN Economic Community Scorecard held in Jakarta, 3-4 September 2010. v List of Acronyms AO Administrative Order AEC ASEAN Economic Community AFTA ASEAN Free Trade Agreement AFAS ASEAN Free Trade Agreement on Services ASW ASEAN Single Window APEC Asia Pacific Economic Cooperation ADB Asian Development Bank ASEAN Association of Southeast Asian Nation ASEZA Aurora Special Economic Zone Authority ATRIG Authority to Release Imported Goods ABMS Automated bonds management system ACOS Automated Customs Operations Systems AEDS Automated export documentation system AICTS Automated import cargo transfer system ASYCUDA++ Automated System for Customs Data BSP Bangko Sentral ng Pilipinas BCDA Bases Conversion and Development Authority BOI Board of Investments BIMP-EAGA Brunei Darussalam, Indonesia, Malaysia, Philippines – East ASEAN Growth Area BOT Build-Operate-Transfer BAI Bureau of Animal Industry BOC Bureau of Customs BI Bureau of Immigration BIR Bureau of Internal Revenue BPI Bureau of Plant Industry BPS Bureau of Product Services BPO Business Process Outsourcing BRIC Brazil, Russia, India and China CEZA Cagayan Economic Zone Authority CPA Cebu Ports Authority CDA Clark Development Authority CDC Clark Development Corporation CFZ Clark Freeport Zone CPRS Client Profiles Registration System CEPT Common Effective Preferential Tariff CKDs Completely Knocked Down vehicles CEPA Comprehensive Economic Partnership Agreement CIQS Customs-immigration-quarantine-security agencies
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